EXECUTIVE SUMMARY
New orders were up 1% in December 2024 compared to December 2023. Year to date through December 2024, new orders were again down 1% compared to 2023. New orders were down 15% compared to the prior month of November 2024, which seems to include some seasonality due to the December holiday break (was down 22% month over month last year).
December 2024 shipments were down 2% from December 2023, and down 7% from November 2024. Year to date through December 2024, shipments were down 6% from 2023.
December 2024 backlogs were down 8% compared to December 2023, and down 2% from November 2024.
Receivable levels were up 1% from October 2024, but down 4% from November 2023, both of which are materially in line with the respective shipment trends.
Inventories and employee/payroll levels are again materially in line with recent months (though December payroll was down from November due to holidays), but down from 2023, indicating that companies have aligned levels to match current operations.
National
Consumer Confidence
The Conference Board Consumer Confidence Index® declined by 7.0 points in February to 98.3 (1985=100)
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell 3.4 points to 136.5.
The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—dropped 9.3 points to 72.9.
For the first time since June 2024, the Expectations Index was below the threshold of 80 that usually signals a recession ahead. The cutoff date for preliminary results was February 19, 2025. “In February, consumer confidence registered the largest monthly decline since August 2021,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “This is the third consecutive month on month decline, bringing the Index to the bottom of the range that has prevailed since 2022. Of the five components of the Index, only consumers’ assessment of present business conditions improved, albeit slightly. Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high.”
On a six-month moving average basis, purchasing plans for homes continued to recover, likely supported by the very recent decline in mortgage rates. On the other hand, buying plans for cars and big-ticket items were down, with notable declines for TVs and electronics. Consumers’ overall intentions to purchase additional services in the months ahead were changed little, but their priorities shifted slightly: personal and health care, as well as movies and live entertainment, moved up the priority list, at the expense of streaming and travel. Vacation plans continued to trend downward.
Housing
Existing-home sales retreated in January, according to the National Association of REALTORS®. Sales slipped in three major U.S. regions and held steady in the Midwest. Year-over-year, sales rose in three regions and were unchanged in the South.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – descended 4.9% from December to a seasonally adjusted annual rate of 4.08 million in January. Year-over-year, sales improved 2.0% (up from 4 million in January 2024).
Single-family home sales declined 5.2% to a seasonally adjusted annual rate of 3.68 million in January, up 2.2% from the previous year. The median existing single-family home price was $402,000 in January, up 5.0% from January 2024.
Existing condominium and co-op sales faded 2.4% in January to a seasonally adjusted annual rate of 400,000 units, identical to one year ago. The median existing condo price was $349,500 in January, up 2.9% from the prior year ($339,500).
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.85% as of February 20. That’s down from 6.87% one week ago and 6.90% one year ago.
Sales of new single-family houses in January 2025 were at a seasonally adjusted annual rate of 657,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 10.5% below the revised December rate of 734,000 and is 1.1% below the January 2024 estimate of 664,000.
Compared to January 2024 on a seasonally-adjusted basis, sales were down 1.1% overall with sales also down 48.1% in the Northeast, down 13.6% in the Midwest, but up 6.8% in the South and up 3.1% in the West.
Other
Real gross domestic product (GDP) increased at an annual rate of 2.3% in the fourth quarter of 2024 (October, November, and December), according to the advance estimate released by the U.S. Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1%. The increase in real GDP primarily reflected increases in consumer spending, exports, nonresidential fixed investment, and federal government spending. Imports increased.
Real GDP increased 2.8% in 2024 (from the 2023 annual level to the 2024 annual level), compared with an increase of 2.9% in 2023. The increase in real GDP in 2024 reflected increases in consumer spending, investment, government spending, and exports. Imports increased.
Sales at furniture and home furnishings stores were up 2.3% in December 2024 from November 2024 on a seasonally-adjusted basis, and up 8.4% from December 2023. However, sales were still down 2.2% for year to date December 2024 compared to the same period for 2023 on an unadjusted basis (were down 3.3% YTD November 2024).
Thoughts
Tariffs certainly dominated the news and conversations last month, and as of press time, we again find ourselves waiting on Tuesday’s announcement to hear exactly what level of tariffs will ultimately go into effect for Canada, Mexico, and China, with the looming threat of potentially others being added in the future.
While the housing data was mixed, consumer confidence really took a hit this month, so it will be interesting to see whether this is the start of an enduring trend or hopefully just a temporary blip that will reverse itself once much the current uncertainty is resolved.
The Home Furnishings Sentiment Index published by Furniture Today was similarly mixed, but reflected long-term optimism for the industry, which is consistent with what we’ve heard from many we’ve spoken to recently.
And the furniture industry does seem to be gaining a little momentum based upon recent industry reports, year-over-year retail data, as well as our own survey’s modest increase in new orders this month. However, it remains to be seen the extent these economic policies will have on the 2025 outlook for the industry and beyond.
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MARK LAFERRIERE, Assurance PartnerMark has nearly 25 years of experience working in broad-based public accounting. He is an integral member of the firm’s Furniture practice group and provides various assurance services for manufacturing, distribution, and transportation clients. He also a member of the Employee Benefit Plan group. |
